Реферат: 5 Year Plan Essay Research Paper Table

?All main brands have local distributor that sells to retailers providing very competitive pricing conditions;

?Retail stores purchasing directly from the brand representatives dominate the market, this should be taken into consideration when bringing new products into Hungary.

Recommended entry mode — Exporting

Exporting – Star Appliances, Inc has had experience in exporting to foreign countries. We have had excellent performance in those countries such as Canada, Mexico, and Japan.

Retail and wholesale distribution is developing toward western standards in Hungary. In the past, large, state-owned monopolies controlled distribution, which was largely supply driven. During the transition period since 1989, the monopolistic state-controlled trading companies have been privatized and/or broken up, but a smooth-working demand-driven system has not fully developed and some inconsistencies remain.

As a result, consumers cannot count on a regular supply of goods — all shoppers are familiar with the “here today, gone tomorrow” nature of inventory, although the use of newer technologies, such as electronic data interchange (EDI), is beginning to improve delivery of goods. Large-scale wholesaling is still embryonic and it is not unusual for retailing and wholesaling to be combined, sometimes even together with manufacturing.

Although Hungary’s retail sector now includes some larger department stores and supermarkets, small family-run stores are still quite common. Examples of foreign chains with operations in Hungary include Auchan (France), Metro (Germany), Michelfeit (Austria), Ikea (Sweden), Baumax (Germany), Humanic (Austria), Julius Meinl (Austria), Penny Market (UK), Cora (France), Marks & Spencer (UK), and Tesco (UK). A Hungarian corporation, Fotex Holding Co., has made a significant impact on the retail sector. Fotex is involved in such diversified market segments as optical, film developing, audio media, household appliances/consumer electronics, cosmetics and furniture. Recently, indoor shopping malls have arrived in Hungary.

Star Appliances, Inc. thinks that it is not feasible to establish a sales subsidiary in Hungary now, because we would like the customers in Hungary to be familiar with our products and our company first. We plan to use local agents and distributors, because they are quite familiar with the Hungarian market. Exporting may minimize the risk of dealing internationally by exporting domestically manufactured products either by minimal response to inquires or by systematic development of demand in foreign market. Exporting requires minimum capital and is easy to initiate. Exporting is also a good way to gain experience in conducting business in Hungary.

FINANCING

The Hungarian Forint (HUF) is fully convertible for business purposes. Because of a worsening current account deficit, the government moved to a crawling peg devaluation exchange rate policy in March 1995. Since then, the HUF continues to be a managed currency with a set monthly devaluation rate.

Most import contracts are secured by an irrevocable letter of credit (L/C) bank guarantee or involve a bank for remittance against documents. This practice is appropriate and recommended when there is no past relationship and experience with the buyer. The most common payment terms in this sector are 30, 60, and 90 days deferred payment depending on the product. Many U.S. commercial banks provide financial services in Hungary for longtime corporate clients. The cost of local financing tends to be high (around 25%). Among the major international financial institutions, the European Bank for Reconstruction and Development (EBRD), the International Finance Corporation (IFC) and the World Bank have various project financing programs. Citibank and Bankers Trust are the only U.S. commercial banks currently in Hungary in addition to several U.S. financial service companies and consultants present in the market. Hungary

is eligible for all U.S. EXIMBank programs available to American equipment exporters.

Appendices:

Market share for White Goods:

Whirlpool+ IgnisElectroluxGroupAEGSiemens-BoschHajduGorenje

Washing Machines33%26%2%14%21%4%

Whirlpool+ IgnisElectroluxGroupSiemens-BoschGorenjeGoldstar

Refrigerators6%74%9%7%4%

Whirlpool + IgnisSamsungMoulinexGoldstarDaewooDeLonghi

Microwave28%24%7%8%18%15%

Total Market Size in pieces in 1998:

Washing Machines (incl. Fronload, 160,600 – 24% increase compared to 1997 Topload, Washer+Dryer)

Refrigerators: 182,700 – 22% increase compared to 1997

Microwaves: 184,600 – 21% increase compared to 1997

Source: Figures are based on preliminary and partial data of the Central Statistical Office 1998 Publications, Budapest, Hungary, on “Foreign Trade Statistics” issued by the Ministry of Economy, 1998 and “U.S.-Hungarian Statistics” issued by Kopint-Datorg Market Research Company.

1. External Environment

?Economic ? Japan?s economic strengths have been overshadowed by its difficulties for much of the 1990s. Recession has brought a serious crisis since 1997. However, the overall economy continued to grow, companies did not shed great amounts of labor, and research and development sending went up. The government stepped in with a five-year economic plan of infrastructure spending. The World GNP Ranking is 2. GNP Per Capita is US$38160.

?Global ? There were 5.3 million Japanese Internet users in 1996. The number is expected to rise to 31,950,000 in year 2000. While these are mostly businessmen using ?the net? in connection with work, the number of household users is also increasing.

2.Industry Analysis